Impact of the Cap on Non-EU Workers

The Conservative Party’s pre-election promise to place a cap on non-EU immigration was amongst the first new policies announced by the UK’s coalition government. Some observer’s questioned how easily such a cap could be imposed and whether it might not have a detrimental effect on UK business and industry. Some have argued that specialist workers from outside of the EU are only recruited when the skills required are not available from the UK’s domestic workforce. It was feared that by imposing a cap too soon, and too arbitrarily, jobs which would have been carried out by workers from outside of the EU might be left unfilled.

An Interim Cap on Non-EU Workers Coming to the UK

An initial cap of 24,000 non-EU workers was introduced by the government to cover the period from June 2010 to April the following year. This represented a reduction of 1300 from the previous year, which might not sound that significant. However, business leaders argue that the previous year’s figure was unrepresentative because, at that time, the UK was firmly in recession. If Britain is emerging from recession businesses should be expanding - and consequently recruiting more workers - as productivity goes up during the recovery.

The Impact of the Interim Cap on Non-EU Workers

Less than six months after it was announced, UK business leaders were complaining that the cap on non-EU workers was having a detrimental effect across the UK’s economy. They claimed that big companies were being restricted to recruiting only a few workers from outside the EU regardless of the actual need. It has been suggested that the quotas imposed for recruitment of non-EU workers were not proportionate to the size of individual businesses or to their labour force requirements.

The UK is still struggling to emerge from the global economic recession. Some analysts believe that the country could yet be sucked back into a state of negative economic growth. The steps that the UK has so far made towards economic recovery have been tentative. As such, it is argued that anything that hampers the ability of businesses or industry to perform could pose a serious threat to the UK’s ability to recover financially.

Businesses Hit by the Cap on Non-EU Workers

Financial companies based in the City of London have been amongst those who have complained most bitterly about the immigration cap on non-EU workers. The arguments they have used against the cap may sound familiar. They are similar to those which were voiced against suggestions that people working in finance - including overseas workers - might pay higher taxes, or fines, as some form of restitution for the economic crisis.

UK-based finance companies have argued that they will lose business to other countries if the environment here is made less attractive to overseas workers - or if companies cannot recruit from overseas. This would result in a decreased ability for these companies to help the UK out of recession. Further it is said that international companies with operations in the UK may transfer their business elsewhere. Since many people blame the banks and finance companies for getting the UK into recession in the first place this argument might not be met with unqualified sympathy. However, and perhaps more worrying for some, other industries have voiced similar concerns about the effect of the immigration cap on their ability to operate competitively in the global economy.

The coalition government’s own Business Secretary has said that the interim measures imposed were having a detrimental effect on UK business. Even within the Conservative Party itself opinion differs as to the wisdom of restricting free economic activity at a time when the UK is struggling to get back on its feet financially and when it is facing a record budget deficit.

A Permanent Cap on Non-EU Immigration

The final figure for a permanent cap due to be imposed from April 2011 will be decided following a consultation into the question carried out by the Migration Advisory Committee. The Migration Advisory Committee is an independent body made up of expert economists and representatives from UK immigration authorities. During a consultation period which lasted several months they heard representations from businesses, industry and other interested parties on the subject of a permanent cap on non-EU immigration.